A taxing question

Even a cursory look at the news in the last week or so in the UK and the issue of major companies not paying their tax cannot have escaped your attention. Since the "glory days" of Vodafone not paying the alleged £6 billion that they owed (they also have a habit of this behaviour in many other countries) it seems a regular occurrence that a team of investigative journalists uncovers another company that pays little, if any, tax for their profits in the UK.

Recent discoveries include Starbucks, facebook, ebay, Amazon and so on... Pretty much every company you can think of will be paying nowhere near the headline rate of corporation tax of 24%, if they pay anything at all. Through complex, but usually completely legal, means companies of this scale can avoid (not evade) almost all of their liabilities, not just in the UK but everywhere. 

This clearly causes much annoyance to many, me included, who are on PAYE and have our tax deducted at source with no real choice. Campaigns and petitions run alongside the calls to boycott the company appear and disappear as soon as the next days papers have another company to witch hunt. Did Starbucks close down last week? Or did the staff working there on minimum wage get really annoyed and possibly depressed at the endless stream of people making tax references to them. Like ringing a call centre in India to complain about the cost of your mobile bill they are not the people making these decisions.

It is also not really the companies fault. Odd for me to type that but it is true. The loopholes are there, they are legal to use, and the primary function of a company listed on any stock exchange is to provide as much return as possible to shareholders. This lead to what I think was the weakest excuse for this sort of behaviour which was that it means the companies can pay more into their shares and dividends which helps pension funds. Not a lot of use if you don't have a pension, or job, or your hospital has been closed down really.

The people to blame are the governments, who over the years in all regimes, are so scared of upsetting any corporation that they allow the loopholes to exist and the tax dividends to shrink. There is clear corruption involved as well, globally. Look at Private Eye for details on things like this, they are usually years ahead of the national press with these "exclusives".

Corporations exist to make money. The financial papers celebrate the billions made by Tesco and their ilk while they advertise on TV with their money saving ideas and products for their customers, and hardly anyone realises the two are incompatible with each other. This is not something that can be changed overnight, and the irony of people setting up facebook and twitter campaigns for people to boycott Starbucks and Amazon must have their CEOs and accountants laughing into their lattes.

It is an ideological argument over whether you believe in paying tax and having a welfare system for the less fortunate, but is turned into an argument over scroungers and laziness to deflect attention from the real issue, which is the skewed allocation of finance and resource in the world today.

But, the important thing to remember, is don't blame or victimise those doing their job, however bad the company may be, those people will be paying tax and working for their income - it isn't the barista in Starbucks ripping you off, it is a man in 1st Class on Virgin Trains.